Gold, silver, and South Korea are experiencing significant price declines amid growing fears of a prolonged war in Iran. These assets, which were popular momentum trades in 2026, are being sold off as investors react to rising oil prices and renewed inflation concerns. The sell-off in gold is particularly surprising, given its traditional status as a safe-haven asset.
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Key Points
- Gold, silver, and South Korea experienced significant declines on Tuesday due to escalating concerns about a prolonged conflict in Iran.
- These assets were popular momentum trades in 2026, attracting investors seeking alternatives to U.S. large-cap tech stocks.
- The sell-off in gold, traditionally a safe-haven asset, is particularly noteworthy.
This year's hottest trades – gold, silver, and South Korea – are facing a sharp downturn as fears mount over a potentially extended war in Iran.
Here's a breakdown of the market moves:
- Gold Prices Slide: Spot gold was down over 5% to $5,041.81 per ounce, while gold futures dropped 5% to $5,049. Despite the recent dip, gold is still up more than 16% year-to-date.
- Silver Prices Tumble: Futures tied to silver fell more than 8% to $81.23 per ounce, but remain 15% higher year-to-date.
- South Korea Down Huge: The iShares MSCI South Korea ETF (EWY) plunged 14%, although it's still up nearly 30% year-to-date.
Each of these trades gained significant momentum in 2026 as investors, wary of their exposure to U.S. large-cap tech, sought asset classes with potential for outperformance. The S&P 500 has risen 64% cumulatively over the past three years but is currently down 1% this year.
Investors remain optimistic about gold's long-term prospects, anticipating a potential rise to $6,000 an ounce as central banks diversify away from the U.S. dollar. Silver is expected to benefit from supply-demand dynamics and its growing use in AI applications.
South Korea's strong performance this year is largely attributed to global demand for memory chips, which has boosted the shares of Samsung Electronics and SK Hynix, key components of the Kospi index. These two memory giants are up over 50% and 44% year-to-date, respectively.
However, all three trades experienced a reversal on Tuesday as the possibility of a deepening conflict in Iran fueled inflation concerns and drove up oil prices. Brent crude oil topped $84 a barrel, while WTI crude jumped above $77.
Even gold was caught in the selling frenzy, an unusual occurrence for a safe-haven asset typically sought during times of crisis. Investors appeared to be indiscriminately selling assets perceived as having risen too quickly.
